Vertiv (VRT): Examining Valuation After Strong Share Price Gains in 2024

Vertiv Holdings Co (VRT) has delivered strong gains for investors this year, with its stock up 52% year to date and 43% over the past twelve months. The company’s momentum has sparked ongoing interest in its financial performance.

See our latest analysis for Vertiv Holdings Co.

Vertiv’s eye-catching year-to-date share price return of nearly 52% has turned heads, with the company benefiting from robust demand and operational momentum. After a recent surge, some short-term volatility has emerged. Overall, long-term total shareholder returns above 1,000% in three years make this a standout story of sustained growth.

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With shares climbing to new highs, investors face a familiar question: does Vertiv still offer untapped value, or is the market already factoring in all of its future growth potential?

Most Popular Narrative: 6.7% Undervalued

Vertiv's most closely watched narrative now places its fair value at $192.66, with the stock recently closing at $179.80. This apparent gap is drawing fresh attention, with bullish projections fueling lively debate over the assumptions behind these numbers.

Accelerating global demand for high-density, AI-driven data centers is driving robust growth in Vertiv's sales pipeline and backlog. This is evidenced by recurring record order levels, backlog growth, and management's raised organic sales growth guidance, supporting potentially higher future revenue.

Read the complete narrative.

Want to know why analysts believe Vertiv can continue this remarkable run? The narrative’s fair value hinges on aggressive growth projections and margin expansion that could surprise even long-time industry watchers. What specific financial leaps power this bullish outlook? Read on for the formula analysts are betting on.

Result: Fair Value of $192.66 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing supply chain disruptions and rapid technological shifts could challenge Vertiv’s margin improvements and long-term growth trajectory. This may temper the current upbeat outlook.

Find out about the key risks to this Vertiv Holdings Co narrative.

Another View: Gauging Value Through the Market’s Lens

While analyst narratives see Vertiv as undervalued, the market’s favored measure tells a different story. Vertiv’s price-to-earnings ratio stands at 66.5x, which is more than double the US Electrical industry average of 29.9x and even higher than its peers’ 37x. The current ratio also exceeds what is suggested by the fair ratio of 63.6x, indicating that Vertiv may be carrying a valuation premium. Does this premium signal risk, or is it justified by the company’s growth?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Vertiv Holdings Co Narrative

If you see the numbers differently or value your own independent research approach, you can craft your personal outlook for Vertiv in just a few minutes with Do it your way.

A great starting point for your Vertiv Holdings Co research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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